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MOSL: AUTOMOBILES (MAY-18 SALES ESTIMATES)-2W/PV retails momentum moderates sequentially

Automobiles (MAY-18 Sales Estimates): 2W/PV retails momentum moderates sequentially; Rural markets continue to outperform urban markets

 

• Our interactions with leading channel partners indicate that 2W demand remains robust during the marriage season. However, retails momentum has lost steam in the northern, central and western markets due to the onset of 'Adhik Maas' (inauspicious period from 16th May to 12th June). Growth in the southern markets, though, remains steady.
• MSIL's retails are growing at 11-13% in southern markets and 8-9% in other markets. Rural dependent M&M too is witnessing healthy retails in the eastern, western and central markets. In 2W, wedding season demand remains robust, with average retails growing 15-18% for entry-level and executive bikes. However, the onset of 'Adhik Maas' from 16th May has slowed down retails in key markets. The impact from easing overloading restriction is ~5% of volumes in Uttar Pradesh (UP). This, however, is mitigated by healthy demand for tippers and customers shifting to low-tonnage vehicles.

 Key highlights

• In the PV segment, Maruti Suzuki's overall dispatches growth is expected to be 20.2% YoY at 164.7k units. Compact segment continues to see robust growth of 56% YoY, while UV and mini segment sales are expected to decline 11.5% YoY and 7.9% YoY, respectively.
• Tata Motors' PV segment is expected to grow 46% YoY, led by its new SUV, Nexon, and other new models like Tiago, Tigor and Hexa.
• M&M's volumes are expected to increase 17% YoY to 79k units, as tractor and UV sales are expected to grow 23.1% and 13.1%, respectively.
• Escorts volumes are expected to increase 13.3% YoY to 7.8k units.
• In the 2W segment, BJAUT's overall dispatches are expected to grow 17.6% YoY to 369k units, led by 18.4% growth in domestic sales and 16.7% growth exports.
• HMCL's dispatches are expected to grow 5% YoY to 670k units.